Cooperatives and State Farms

Starting in l976, the government encouraged farmers to form
cooperatives. Between l978 and l98l, the PMAC issued a
series of proclamations and directives outlining procedures
for the formation of service cooperatives and producers'
cooperatives. Service cooperatives provided basic services,
such as the sale of farm inputs and consumer items that were
often rationed, the provision of loans, the education of
peasant association members in socialist philosophy, and the
promotion of cottage industries.

The producers' cooperatives alleviated shortages of inputs
(because farmers could pool resources) and problems
associated with the fragmentation of landholdings. The
government ordered the creation of these cooperatives
because of its belief that small farmers were inefficient
and were unable to take advantage of economies of scale.

The producers' cooperatives developed in three stages. The
first stage was the melba, an elementary type of cooperative
that required members to pool land (with the exception of
plots of up to 2,000 square meters, which could be set aside
for private use) and to share oxen and farm implements. The
second stage, welba, required members to transfer their
resources to the cooperative and reduce private plots to
l,000 square meters. The third stage, the weland, abolished
private land use and established advanced forms of
cooperatives, whose goal was to use mechanized farming with
members organized into production brigades. Under this
system, income would be distributed based on labor
contributions.

The government provided a number of inducements to
producers' cooperatives, including priority for credits,
fertilizers, improved seed, and access to consumer items and
building materials. According to the ten-year plan, more
than half of the country's cultivated land would be
organized into producers' cooperatives by l994.

Despite the incentives, farmers responded less than
enthusiastically. Farmers saw the move to form cooperatives
as a prelude to the destruction of their "family farms." By
l985/86 there were only 2,323 producers' cooperatives, of
which only 255 were registered. Some critics argued that the
resistance of farmers caused the government to formulate its
resettlement and villagization programs.

A major component of the government's agricultural policy
since the l974 revolution has been the development of largescale state farms. After the l975 land reform, the Derg
converted a majority of the estimated 75,000 hectares of
large, commercial farms owned by individuals and
cooperatives into state farms. Since then, the government
has expanded the size of state farms. In l987/88 there were
about 2l6,000 hectares of state farmland, accounting for 3.3
percent of the total cultivated area. The ten-year plan
indicated that state farms would be expanded to 468,000
hectares by l994, accounting for 6.4 percent of the
cultivated land.

The primary motive for the expansion of state farms was the
desire to reverse the drop in food production that has
continued since the revolution. After the l975 land reform,
peasants began withholding grain from the market to drive up
prices because government price-control measures had created
shortages of consumer items such as coffee, cooking oil,
salt, and sugar. Additionally, increased peasant consumption
caused shortages of food items such as
teff
(see Glossary),
wheat, corn, and other grains in urban areas. The problem
became so serious that Mengistu lashed out against the
individual and petit burgeois tendencies of the peasantry
and their capitalist mentality on the occasion of the fourth
anniversary of military rule in September l978. Mengistu and
his advisers believed that state farms would produce grain
for urban areas and raw materials for domestic industry and
would also increase production of cash crops such as coffee
to generate badly needed foreign exchange. Accordingly,
state farms received a large share of the country's
resources for agriculture; from 1982 to 1990, this totaled
about 43 percent of the government's agricultural
investment. In l983 state farms received 76 percent of the
total allocation of chemical fertilizers, 95 percent of the
improved seeds, and 8l percent of agricultural credit. In
terms of subsidies, between l982/83 and l985/86 the various
state farm corporations received more than 90 million birr
in direct subsidies. Despite the emphasis on state farms,
state farm production accounted for only 6 percent of total
agricultural output in l987 (although meeting 65 percent of
urban needs), leaving peasant farmers responsible for over
90 percent of production.

The stress on large-scale state farms was under attack by
Western donors, who channeled their agricultural aid to the
peasant sector. These donors maintained that experiences
elsewhere in Africa and in Eastern Europe and the Soviet
Union had shown that state farms were inefficient and a
drain on scare resources.

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